Lexicon: UK - United Kingdom EU/EEC- European Union FBT: Farm Business Tenancy AHA: Agricultural Holding Act FAT: Full Agricultural Tenancy Yr: Year H: Handshake Agreement GA: Grazing Agreement a: Acres
1) Understanding the origin of UK landholding: From feudality to landlords:
Sources: 1. Classes at AgroParisTech by Prof. Sophie Devienne 2. A historical geography of England and Wales R.A Doghson and R. Butlin. 3. A history of Wales J. Davies
The UK land market has a complex history and is the heir of centuries of evolution out of feudality (rights and musts of each actors of a pyramidal society). There was no revolution in the UK and the feudal system stayed in place morphing itself gradually over time into landlordism. Nobility being given fiefs by the realm gradually converted the set of obligations of peasants under their power into tenant-landlords relationship. A monetary rent being paid yearly for the occupancy of the land instead ofthe complex set of must on each side.
This was fuelled by the nascent industry revolution, the increased need for commodities – the wool of the first industrial revolution - and later by the 18th century agricultural revolution, linked to the rotation of Norfolk- both of those needed a reorganisation of farming system and field boundaries. Foundamentally unable to deal with the open-field farming systems existing.
This meant that at the start the land was controlled by a handful of the nobilitybut mostly squires (the landed gentry). With “estates” representing the entity operating those, large landowners controlled by a unique family and transmitted by primogeniture. Copyholders and yeoman were the only few exceptions to this “monopoly” on land.
2) Extremely insecure type of tenures morph under the pressure of the 19th century agricultural market depression:
Additional source in this section: 4. PembrokeshireCounty History Volume IV: Farming in Pembrokeshire 1815-1974 P77-110 (1994) –Davies et al. – Pembrokeshire Library 5. Landscape observations and interviews in study areas (St Davids - Pembrokeshire, Bala - Upper Dee Vale). 6. The Land Question in nineteenth-century Wales, Ireland and Scotland: a comparative study David W. Howell The Agricultural History Review Vol. 61, No. 1 (2013), pp. 83-110 (28 pages)
Published by: British Agricultural History SocietyIf we jump back to the 19th century, it’s first “half” was rather positive for farming with protected prices that allowed landowners to gradually implement the 18th century agricultural revolution. Heavy investment to increase sustainably the production through improved agronomic logic and additional work (both in the year and overall).
Landlords could do as they bid in term of lease conditions and it is widely acknowledged that they concentrated most of the political power until the end of the 19th century. Tenancy duration, rent reviews, evictions, compensations for improvements were not regulated and the use of the land could be attached to requirements. The access to a tenancy was competitive and there was an obligation to bring the “running capital” (livestock, implements..) as well as prove that you would be able to face the overheads (labour representing at least 1/2 of the expenses of the farm).
This cowshed located in the Dee Vale (Rhewl) is typical of a longhouse (slits) from teh 19th century that has been adapted through time (windows post 1930's). Housing the cattle and the fodder/grains directly linked to the 18th century agricultural revolution (By the author, 2021).
Though this relative “stability” changed rapidly from 1870’s and the agricultural depression, corn prices collapsed rapidly on a number of agricultural produces on the internal market. This resulted in devastating losses for farming in the UK.
This was the direct result of a free-trade policy focused on the nascent industry that allowed the newly food-exporting countries (Australia, Argentina, USA) to export their produces to the UK. Nearly the only place without trade barriers at the time. This was facilitated by the new transportation and food conservation technical breakthroughs.
While they were facing increased competition UK farmers had to deal with the fact that the much needed labourers could access an ample job market in the industry. Thus increasing the cost of labour and cost of production at a time where mechanisation was not a common feature.
As a result there was a drop of “profitability”, though farms were autonomous they still had to pay the labourers and the rent. Many farms, particularly in remote areas or on “marginal land” (not the best suited to the farming systems of the time). For example around St Davids in Wales or around the Llyn Celyn (there you can still see the remnants of former farms).
This state of limbo lasted until the 1st World War and during this time many landlords had to adapt quite drastically to the new context. How do you cope when you can’t have someone farming your land and that it goes to waste losing part of its agricultural value? How do you cope when boats unload cheap preserved food in the hearts of the industry powerhouse?
Snowdonia National Park, by the author. The literature on the subject encompass the diversity and multi-faceted characteristics of this depression, not touching every farm and areas in the same way. Hunt et al. 2002 or P.J Perry 1969 are good example of that contrasting local evidence.
First, farmers could reduce cost by focusing more on grassland and reducing the amount of arable land (thus the amount of work, seeds...). There was thus a slightly higher focus on livestock production (all the more as wool or leather were a substantial income). Or rather than selling goods with an oversea competition (butter, cheese, corn-beef), farmers that could do so would focus on perishable goods (fresh milk, eggs…) but it was only possible if they had a market easily accessible nearby.
This meant also that a number of farms had to be relet on the market or where struggling to meet the terms of their let - at the time there was also a growing discontent represented by example by the farmer's alliance, reclaiming fairer tenancies-. Landlords had to adapt to reflect the difficult context; longer and secured tenancies (100 years or 3 generations), scheduled rent reviews, rules on improvement compensations, free years of rent at the start, bidding by tender, reduced restrictive clauses… Some farms were also re-organised at that time to enlarge them and accommodate the lower output of farming systems with less “ploughing”.
The gradual development of succession taxes at the back end of the 19th century and during the 20th century only reinforced the attrition of many estates. This pattern of the landlords investing and taking in hand the land when the context is favourable and slightly pulling out at times of crisis is no different to what we witness over the next 200 years.
3) A change in the nature of landholders:
Sources in this section: 1. PembrokeshireCounty History Volume IV: Farming in Pembrokeshire 1815-1974 P77-110 (1994) –Davies et al. – Pembrokeshire Library 2. Interviews in study areas (South Pembrokeshire, Bala - Upper Dee Vale and Vale of Clwyd). 3.
Farming in Depression - British Agricultural History Society (2002) J. Moore-Collyer.
A mainly tenanted sector starting to be regulated by the UK
According to the MAAF data in 1908 there were 88% of the farm and farm land rented the rest being farmer’s owned. We will see that this proportion will totally in less than a the century.
The increase in death duty was the main tool that hurt the existing landowners, forcing them to sell-off some of their land. Among buyers of those farms a new category of buyer came up; county council. From 1894 they could buy land in order to let it as smallholdings, a farming ladder into farming. In front of the reluctance to invest in those at first Asquith made it mandatory (Agricultural Holding Acts 1892 allowed them and 1908 made it mandatory). By 1945 they would represent 3-5% of the farms and land. By that time lifetime(s) tenancies had become the norm but the tenanted nature of farming in the UK hadn’t change.
A sale document from the Mote estate in Pembrokeshire, the coherent organisatioon of farms in lot is clear (1926?), showcasing the "coherent" organisation of land around farms. Also sold at a time when estates were being dismantled.
The context in farming gradually changed, first mechanization gradually allowed farms to reduce (if only gradually/partially) labour cost while remaining mainly autonomous and grass based. But the 1st World War tipped the scale, at its beginning Britain was only producing around half of its food being a major challenge when maritime routes are endangered. Farms were incentivised to increase food production, most of all arable production (drainage grants, supportive prices…). Finally! A clearly profitable era for every farm. Lowland farmers and close to towns were in a better position than upland and remote ones. During wartime landlord were prevented from increasing rent-cost by law.
The mortgage necessary to pay for the farm would have had to be repaid on decades like the one of today. Thus the long term context is the more relevant to understand property accession.
A gradual and unequal accession to property
With the war’s deathtoll many death duties had to be paid, only 2 years after the war the UK went back down into agricultural depression (reducing potential land profitability). Those 2 factors lead to many farms being sold-off around that time. And the divide previously mentioned persisted. Farms being bought would be small to medium sized, not the best quality land and mostly in lowland areas, church estates were liquidated around that time as well.
Those farms struggled through the 1920's agricultural depression with heavy interest to pay and world surplus dumped on the UK (and not so much linked to price guarantee withdrawal after 1917). Only some productions were supportive (liquid milk if you had a close by market...).
Those farms were gradually saved through the 1930’s with the reversal in policy on agriculture in the coalition government. Import duties on food were set up and a number of marketing board were created. There was also a number of subsidies schemes on improvement and direct support.
Even then there was an imbalance depending on your potential and location in terms of total production achievable and ease to be collected.
The numbers below are the direct result of this two-fold evolution from 1920 to the beginning of the second world war.
- In wales in 1909 10% of farmers were owner-occupied in 1941 it represented 39%.
- The amount of green crops (fodder crops for cattle) in Wales went up from 7% in 1915 to 22% in 1939 (in the acreage). The
- In 1922 30% of milk was sold as butter 50% as liquid, the mix went to 10% of butter and 75% of milk sold in 1939. - MAAF Data
This meant that gradually on milk production and arable production all producers were equal, wherever they would be located. The 2nd World War was another turning point, farms played their part to deal with U-boat blockade. There were subsidies on farm improvement and arable farming, market control was reinstated and a fully controlled food supply was organised, a real centralisation of food processing.
- After the 2nd WorldWar farmers in a supportive environment increasingly purchased their holdings:
After the war, death duties were hiked one last time while a new agricultural policy was put into place. This policy acknowledged the role of farming in the victory by giving a secure framework for agricultural markets in favour of farmers. Among the goal was the fair remuneration of farmer’s work. At the same time tenancies were reformed putting into the Agricultural Holding Act 1948 (AHA) all the benefits from lifetime and secured tenancies. Gradually under this pressure a number of estates were dismantled or had to sell at least part of their land, the growing end of primogeniture inheritance played it’s part in it. Farmers also had the money to buy those back.
Nota: The development of fast transport gradually impacted positively uplands offering more market access.
This trend was fuelled up by the widespread adoption of the 20th century agricultural revolution which allowed farm’s income to follow the average wage evolution. The adoption of this revolution which despite investment subsidies (that increased from the 1970’s) came at a cost meant that upland and more defavourised milieu farms took more time to buy back their land. For example waiting for the more supportive agricultural price from the 1965-1975. The bigger the farm the more complicated it was to gather the money.
Geoff, 1940, National Library of Wales. The 20th century agricultural revolution played a part in reshaping the countryside and allowing farms to gradually manage more land than they did to increase outputs and maintain livelihoods.
While estates certainly relinquished a lot of their land around that time some of it was partly taken up by other institutions (sometimes offered); some government held like national parks but also to a number of charities like the national trust tasked with a preservation mission.
Later the AHA leases were transformed as Full Agricultural Tenancy (FAT) in 1984 but the spirit was similar. We note that given the AHA conditions it not as interesting to sell the land to someone else than the farmer due to the lifetime lease, restricted rent review and potential succession rights. .
But as farms were able to grow in size thanks to the new tools available and the supportive farming context… some farms began to crave for additional land. As the tide turned on farming around 1980-1990’s with a slightly harder to navigate context, increasing work productivity was seens as the option to maintain farm incomes. The amount of available land for sale on the market was dropping steadily as the result of this hunger for land of expanding farms (Savills 2016). Renting was thus sought after by farmers. This meant that 11m grazing contracts (in the grey, not official) could be done with farmers going into retirement (that didn’t fully implement this revolution, no succession and going at least into part-retirement).
Estates willing to stay in farming had more options to "take back control" (if not selling the land) going into share farming (one bringing the land and the capital, the other bringing the work and the running capital…) or farming themselves the land.
At the time there was an intense pressure to find land.
In the UK by 1984 there was now 60% of the area owner-operated and 69% of the farms owned. By 1994 this has climbed to 65% and 76%. Maaf.
From that time new entrants started to gently arrive in the land market, corporations and pensions funds. Finding in farmland and farming a reliable and safe investment with good capital returns. This trend increased gradually through the 1990 and 2000. Most of them buying remnant of estates.
4) A land market becoming increasingly competitive:
Sources: 1. Interviews from fieldwork from the author (Pembrokeshire, Bala, Vale of Clwyd) 2. A. Butler et al. 2008. Agricultural tenure in England and Wales. University of Exeter, Centre for Rural Policy Research, Exeter. 3. Gibbar & Ravenscrof 1997 Agricultural Tenancy Reform, The End of Law or a New Popular Culture
The turning point for the land market came in the 1990’s. (1) The tenancy market was in limbo with very little renting agreement concluded officially. The neo-classicist ideology in power at the time gave birth to the 1995 tenancy laws reform that gave a renewed flexibility to the agricultural tenancy sector with different agreements possible. (2) At the same time the subsidy changed but continued to favour farm expansions. In a difficult environment many farms had no choice but try to expand. It was only later from the 2000’s that farm subsidies began to be paid by the acre.
At the same time output prices support began to go down and new “technical” evolutions appeared increasing land and work productivity though at a cost. This options offered the technical ability to expand (despite the market context given subsidies linked to output), expanding was a way to maintain an income but it came at a high capital cost. Thus renting land was an easier way to get access to the land. It is important to understand that around that time there was a hunger for land on some farm.
On the flipside the output price pressure, opportunities outside of “pure” farming pushed people out of production. 1990’s was marked by a steep drop in terms of “active” farms number even steeper than before. A number of farms going out of farming and retiring (possibly small) made the choice to rent-out the land.
The trend of renting-out for former farmers provides an income to top-up the pansion, it can sometimes be spotted in the landscape with "patches" managed very homogenously, as relatively far away from the main holding. Here it was obvious in the landscape (for example after silage/rolling) or even on the satellite map. We are in Pembrokeshire. Google Earth 2021.
County council from the 1980’s were gradually sold off as council no longer had the obligation to retain some farmland, most of the land went to sitting tenants or was split up and sold. This liquidation of county council went on gradually and accelerated as austerity hit them or a pressing financial need (like investing in an equipment) came round. This path has been preferred as on-farm investment were sometimes necessary to pursue farming (and at that time interest rates were high while return from farming were not as good as they once were).
For many large landowners this was an opportunity. Particularly if no investment had been done on farms given the tenant power in the relationship. This also meant given the fast deterioration of the agricultural market that previously landlord-managed farm might have been split-up and rented-out.
Around the 1990’s the trend of neo-rurality increased steeply (at least geographically), city dwellers coming back to the rural areas to live. With the relative reduction in farming “profitability”. This was also due to the increase in population of rural areas, but the population mix gradually changed all the more in scenic areas. Some would buy houses and former farmhouses, other would buy developments on former farmland. “Development” land has quite a different price-tag compared to farmland.
So the supply of land is not fixed but actually diminishing. But the supply of land on the rented market has increased again as a result as the tenancy reform. Finally this market is particularly difficult to follow as there are no obligations to report rent paid. For example the data of the Welsh Government does not match landscape observations.
5) Ballooning prices for both land and rents ?
Sources: 1. Trouvé & Solliec (2012) Le second pilier de la Politique agricole commune, vecteur de différenciation régionale en Europe? Une comparaison entre cinq régions européennes, 2012. 2. Savills 2. Savills Land Agent, 2021. Farmland Market in 2021.
Under evolving policies of the CAP and owing to local choices gradually in England and Wales farming subsidies got linked to the acreage that one held. You had entitlements to have access to the subsidies from 2005. But if those were not activated you would lose your rights to claim them, to claim them you had to have control of the land. The development of the 2nd pillar scheme meant that subsidies on “habitat specific land” could get per acres additional subsidies.
Savills research graph showing the land value increase, since the Brexit vote this value has stabilized, but as demand remain extremely low prices remain high in front of an unsatiated demand.
This clearly fuelled the development of grazing agreements and handshake agreement as it was allowing pre-retired farmers to claim the subsidies. From institutional landlords it meant that there was an inflation of rents along renegotiations to take into account the fact that subsidy were on the land and not on the production anymore. The competition in the land market as a whole due to the continuing output/input price squeeze (and the newly available 21st century agricultural revolution – IT) requiring further expansion on specialized farms.
The balance of power is clearly and firmly in favour of landlords, all the more given the recent increase in input prices over the last decade. This also explains how high the prices of land have skyrocketed, there was a certainty of making the investment pay if only out of subsidies. On the flipside since Brexit has been announced the uncertainty had the side effect to limit land price increase. Though it differs between areas. For example milk producing areas have not seen any decrease compared to other places.
6) Factsheet landholders of the UK
To understand today's land market and particularly renting market and how agreement we have to see it as the meeting of a demand and an offer. As it is not very regulated it is important to understand both parameters to have an idea of possible future evolutions as well as the reasoning behind existing rents.
As synthetized above from a variety of sources the different landowners/landholders have very different profiles and do not control similar acreages, number of farms and have very different strategies as a result.
By the author from Fielwork observations. Completed by Butler et al. 2007. and internet websites of charities, estates, private companies.
Other landlords and strategies:
There are other important landlordsin the UK that one has to mention, amongwhich the MoD which will have 240K ha over the UK mostly for training purposes.The land is usually grouped and rented out as “rough grazing” as per agreement dealt by charities but without the environmental aspect. They offer a stable lease with some constraints in terms of use. The MoD also has a few farms that it rents out to farmers.
Finally to conclude this long blogpost I wanted to add that the process of rent negotiations is directly linked to the elements that we mentioned above and every rent might be different depending on the factors shown in the following diagrams. But knowing who owns the land and offers it to rent is the first step while knowing who rents it in is another matter that my research has already investigated heavily.
Rent negotiations and how to find an agreement on a rent. A complicated process and very different agreement explaining the enormous gap in rent paid between farms for similar land. By the author.
The land market in the UK is a peculiar one with an offer lower than in some countries of the EU (like France) and a demand that was unsatiated, besides the landowning patterns are still heavily influenced by past history and the laws attached to it. While price of land and of rent have been buoyed by CAP subsidies in the past decades it is unlikely that this trend will continue everywhere. It is likely that low added value per acres farming types (inc. cereals) may go down if the coming schemes are not ample enough. On the flipside in dairying areas it is likely that it will continue to increase.
Possible evolutions for rent and land prices in the UK as a result of new policies. Unsubstantiated speculatiosBy the author
Théo Lenormand - Any questions or comments are welcome, please quote if you want to reuse.
